Investors drove Brazilian stocks lower on profit-taking on Friday, as a slump in Wall Street added to bearish sentiment. The benchmark Bovespa index closed down 0.75 percent to 66,200.48, snapping a five-day streak of gains during which the index had added about 6.5 percent. The index had advanced nearly 78 percent so far in 2009 through Thursday's close.
Morning traders not only booked profits on the real's 37-percent gains so far in 2009 but were also spooked by reports that the government was considering reviving a tax on capital inflows to prevent the real from strengthening further. But later in the day Brazil's President Luiz Inacio Lula da Silva said that the government had no such plans.
The fall in stock prices was based on booking profits, said Otavio Vieira, director of investments at Safdie. Stocks in the United States fell, too, on disappointing quarterly results from Dow components General Electric Co and Bank of America Corp.
Because the United States is the world's largest economy, Brazilian investors often look to those markets to gauge international sentiment and risk-taking. State-controlled energy giant Petrobras slumped 0.55 percent to 36.40 reais as crude oil saw choppy trading on a stronger dollar. Mining company Vale, the world's largest iron ore producer, dipped 0.10 percent to 40.15 reais.
Petrobras and Vale are the two most heavily weighted stocks in the index. Steelmakers, which had advanced recently on recovery hopes and plans for beefed-up construction in Brazil ahead of the 2014 World Cup and 2016 Olympics, fell on Friday.
Gerdau lost 3.55 percent to 28.81 reais, Usiminas slipped 1.5 percent to 52.40 reais and CSN declined 1.7 percent to 60.75 reais. Sugar and ethanol company Cosan added 1.67 percent to 20.70 reais. The company's chief executive unexpectedly resigned on Thursday, though he will remain chairman of the board.
Changes in yields on Brazilian interest rate futures contracts were mixed, with short-term contracts largely dipping. The yield on the contract due January 2011 slid to 10.43 percent from 10.47 percent. The yield on the contract due January 2012 rose to 11.61 percent from 11.52 percent.
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